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WASHINGTON_President Barack Obama's top health care adviser said Wednesday a compromise is within reach on a government health plan for the middle class that wouldn't drive private insurers out of business.

Offering the option of government coverage to workers and their families has become one of the most contentious issues in the debate about overhauling health care to cover the uninsured and curb costs. Obama has proposed a public plan, and liberals insist it be part of any final deal. But conservatives and businesses fear that could open the door for a government takeover of the system.

Nancy-Ann DeParle, director of the White House health reform office, said a public plan could be designed to address concerns about the federal government overreaching in its role.

"I'm very hopeful we'll be able to reach an agreement on that," DeParle said in a session with reporters at which she fielded repeated questions on the issue.

"If it's a policy disagreement, there are ways of bridging that gap," said DeParle. For example, a public plan could pay hospitals and doctors rates that are similar to what private insurers pay _ addressing fears that government would use its power to dictate low rates that private plans can't compete against.

Such a plan could still cut costs because it wouldn't have to turn a profit, said DeParle, adding that it would also save on administrative costs.

However, DeParle acknowledged that ideological objections to government's role would be hard to overcome.


Most Americans may not realize it, but government already pays nearly half of the nation's health care tab. Government programs cover seniors, poor families, and many children. Obama has proposed to expand that.

His plan would offer middle class workers and their families the option of enrolling in a public plan, along with private insurance, through a new kind of purchasing pool.

"He wanted a mechanism to lower costs and keep the private sector honest," said DeParle. But Obama has avoided filling in the details, thereby giving himself some room to compromise.

Those details would be critical, according to a recent economic study. The Lewin Group, a consulting firm, found that a public plan would help to significantly reduce the number of uninsured. But depending on how it's designed, it could also take away much of the business from private insurers.

A public plan open to all employers and individuals, and paying the same as Medicare, would become the dominant insurer in the country, the study found. But if the plan were open only to individuals and small businesses, and paid rates similar to private insurers, its impact would be limited. In that case, the public plan would mainly be helping groups that now have a hard time getting private coverage.

The insurance industry remains skeptical.

Lewin is a subsidiary of UnitedHealthcare, the nation's largest health insurer. However, the consulting firm says it makes its own judgments, and its work is used by groups on all sides of the health care debate. For example, Lewin recently did a study for the Commonwealth Fund, a New York-based research center that released a health care proposal featuring a strong government plan.